PREVIOUS IIFT QUESTION PAPER

77. For summarizing the passage, which of the
following is most appropriate:
(1) The study explored how citizens’
commitment to legal authorities changed as a
function of their initial level of commitment
and their perceptions of how fairly they were
treated in their recent encounters with legal
authorities.
(2) The influence of individuals' prior
commitment to an institution on their
reactions to the perceived fairness of
decisions rendered by the institution was
examined.
(3) Given the generally positive consequences to
organizations of having committed
employees, it may be that unfair managerial
practices would begin to alienate the very
employees that the organization would least
wish to alienate.
(4) The passage aims at understanding how
people define happiness and these
definitions include instrumental view-points.
Passage - 4
In the annals of investing, Warren Buffett stands
alone. Starting from scratch, simply by picking stocks
and companies for investment, Buffett amassed one of
the epochal fortunes of the twentieth century. Over a
period of four decades more than enough to iron out
the effects of fortuitous rolls of the dice, Buffett
outperformed the stock market, by a stunning margin
and without taking undue risks or suffering a single
losing year. Buffett did this in markets bullish and
bearish and through economies fat and lean, from the
Eisenhower years to Bill Clinton, from the l950s to the
l990s, from saddle shoes and Vietnam to junk bonds
and the information age. Over the broad sweep of
postwar America, as the major stock averages
advanced by 11 percent or so a year, Buffett racked
up a compounded annual gain of 29.2 percent. The
uniqueness of this achievement is more significant in
that it was the fruit of old-fashioned, long-term
investing. Wall Street’s modern financiers got rich by
exploiting their control of the public's money: their
essential trick was to take in and sell out the public at
IIFT 2010
opportune moments. Buffett shunned this game, as
well as the more venal excesses for which Wall Street
is deservedly famous. In effect, he rediscovered the
art of pure capitalism, a cold-blooded sport, but a fair
one. Buffett began his career, working out his study in
Omaha in 1956. His grasp of simple verities gave rise
to a drama that would recur throughout his life. Long
before those pilgrimages to Omaha, long before
Buffett had a record, he would stand in a comer at
college parties, baby-faced and bright-eyed, holding
forth on the universe as a dozen or two of his older,
drunken fraternity brothers crowded around. A few
years later, when these friends had metamorphosed
into young associates starting out on Wall Street, the
ritual was the same. Buffett, the youngest of the
group, would plop himself in a big, broad club chair
and expound on finance while the others sat at his
feet. On Wall Street, his homespun manner made him
a cult figure. Where finance was so forbiddingly
complex, Buffett could explain it like a general-store
clerk discussing the weather. He never forgot that
underneath each stock and bond, no matter how
arcane, there lay a tangible, ordinary business.
Beneath the jargon of Wall Street, he seemed to
unearth a street from small-town America. In such a
complex age, what was stunning about Buffett was his
applicability. Most of what Buffett did was imitable by
the average person (this is why the multitudes
flocked to Omaha). It is curious irony that as more
Americans acquired an interest in investing, Wall
Street became more complex and more forbidding
than ever. Buffett was born in the midst of
depression. The depression cast a long shadow on
Americans, but the post war prosperity eclipsed it.
Unlike the modern portfolio manager, whose mindset
is that of a trader, Buffett risked his capital on the
long term growth of a few select businesses. In this,
he resembled the magnates of a previous age, such as
J P Morgan Sr.
As Jack Newfield wrote of Robert Kennedy, Buffett
was not a hero, only a hope; not a myth, only a man.
Despite his broad wit, he was strangely stunted.
When he went to Paris, his only reaction was that he
had no interest in sight-seeing and that the food was
better in Omaha. His talent sprang from his unrivaled
independence of mind and ability to focus on his